India eyes $100b investment after FTA with UAE

FTAs are expected to give a major fillip to India’s exports drive aimed at reaching $500 billion in by 2023.

The UAE and India are likely to sign a free trade agreement (FTA), most probably within days, in a landmark move that could give duty-free access to both countries for a wide range of products across various sectors.

According to informed sources in New Delhi, the government expects the FTA to facilitate more investments from the UAE in the National Infrastructure Pipeline, with officials estimating the amount to be $100 billion if conducive conditions are in place.

"The India-UAE agreement is ready and it would be signed on February 18," PTI news agency quoted a source as saying.

Initially, both countries had planned to sign the milestone trade pact in January, when Indian Prime Minister Narendra Modi planned to visit the UAE. “However, the visit was postponed due to the third Covid wave in India. It was then resolved to sign the pact in March. But it has now been advanced to February as both sides are keen on getting their economic partnership going as a prelude to greater cooperation in the new Quad of the West, comprising India, the UAE, Israel and the US,” India media reports said.

New Delhi expects to sign three trade pacts with the UAE (Comprehensive Economic Partnership Agreement), the UK (Enhanced Trade Partnership) and Australia (Comprehensive Economic Cooperation Agreement) by year-end. India is also negotiating trade deals with the European Union, Australia, Canada, Israel and some other GCC countries. These FTAs are expected to give a major fillip to India’s exports drive aimed at reaching $500 billion in by 2023.

In September 2021, the UAE Minister of State for Foreign Trade Thani bin Ahmed Al Zeyoudi and Indian Minister of Commerce Piyush Goyal formally launched negotiations on the bilateral Comprehensive Economic Partnership Agreement (CEPA). Speaking on the trade deal, Goyal recently said "we hope to make some announcements very quickly."

Under FTA, the two trading partners reduce or eliminate customs duties on the maximum number of goods traded between them. They will also liberalise norms to enhance trade in services and boost investments.

The UAE is currently India’s third-largest trading partner. The UAE is also India’s second-largest export destination after the US, with exports valued at approximately $29 billion in 2019-2020. Bilateral trade between India and the UAE stood at $43.3 billion in 2020-21. Exports were $16.7 billion and imports aggregated at $26.7 billion in 2020-21.

The UAE is the eighth-largest investor in India, having invested $11 billion between April 2000 and March 2021, while investment by Indian companies in the UAE is estimated to be over $85 billion.

India's major exports to the UAE include petroleum products, precious metals, stones, gems and jewellery, minerals, food items such as cereals, sugar, fruits and vegetables, tea, meat, and seafood, textiles, engineering and machinery products, and chemicals.

India's top imports from the UAE include petroleum and petroleum products, precious metals, stones, gems and jewellery, minerals, chemicals and wood and wood products. India imported $10.9 billion of crude oil from the UAE in 2019-2020.

— issacjohn@khaleejtimes.com